So by now we all know Uncle Sam has taken in his 2 wayward children Fannie Mae and Freddie Mac . But as this a temporary situation what is the end game? There are a number of proposals out there.
1 Nationalization. In this scheme The 2 giants would become an agency of the government. This in my opinion is a terrible idea. The government is big enough( read too Big) and they are not very efficient. Ever try to, or know any one trying to get a green card? In any event the Government does not need another layer of bureaucracy . What this would mean is that we would pay salries etc for ever for this type of solution. It is wrong.
2 Privatization. This is where we make them independent companies and we let the market dictate. We wrap this argument in Rugged Individualism and the flag. This argument is flawed on it's face. Isn't the fact that Fannie and Freddie acting as private companies. were more concerned with boosting shareholder profits? This got them to take these risks in the first place!!! If private, there is absolutely nothing to prevent this from happening again. And since they are too big to let go under.... Yep that's right, don't put those bailing bails away just yet. If you don't like this argument go ask the private guys at Bear Sterns..
3 A hybrid GSE. In this scenario the Government would regulate and provide oversight for these companies. But they would be private. This in my opinion is the best scenario. The fact is these 2 had less over sight than Banks, and they abused their position, and were apparently on the verge of failing. So keep them private so that we may accrue those benefits without the expense. Regulate what they do so that they cannot get us into this kind of mess again. Control what they do, just not how they do it.
What think you all ?
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Charlie Ragonesi All Mountain Realty Big Canoe and Mountain Blog
On line at www.allmountainrealty.com Call at 706 579 1098
